The Securities and Exchange Board of India has given a clean chit to Grasim Industries on management control at Larsen & Toubro.

"The investigations are over. There is no issue of management control," Sebi chairman G N Bajpai told reporters in Mumbai on Thursday.

When contacted, a Grasim executive said, "We have not received any formal  communication from Sebi." Asked whether Grasim's open offer would now be revived, the executive said, "We are not in a position to comment on this."

But investment banking sources told Business Standard, "Technically, the open offer can go through, because Sebi has cleared Grasim of any wrongdoing."

But they cautioned that reviving the open offer process would not be automatic since "there have been several developments, proposals and counter-proposals following the original open offer. The Grasim board might want to take a fresh view on the issue, depending on its reading of these developments."

Last October, Sebi told Grasim to put its open offer on hold over the issue of management control. At that time the regulator said the issue of management control by the company needed to be investigated and pending investigations the open offer stood suspended.

Sebi's investigations, the findings of which were conveyed to Grasim in its letter of February 25, said, "material information, which is essential to the shareholders to make an informed decision in regard to the offer has not been made in the public announcement."

The principal findings focused on Grasim's alleged failure to disclose the "objective and purpose of the acquisition of shares and its future plans including whether Grasim had decided to acquire control over L&T or any of the businesses of L&T and whether the acquisition of shares through the open offer is for change in control/management."

Also, Sebi said Grasim had failed to provide a justification for the premium paid to Reliance Industries when acquiring its stake in L&T. Grasim, in its reply filed on February 28, while giving a point-wise justification for its actions, requested Sebi to "clear the present open offer."

Subsequently, on March 5, Sebi asked Grasim to file a fresh offer document containing all the required disclosures, along with certification that the acquisition of a stake in L&T was not with a view to acquiring management control at the company. The Birla company has also been told to justify its open offer price.

Grasim bought Reliance's 10.05 per cent stake in L&T in November 2001. As part of the arrangement, Grasim appointed its own directors on the board of the cement and engineering company in lieu of Reliance's directors.

Acting on the complaints filed by several investor grievances forums, Sebi decided to look into the issue of management control.

The regulator was also influenced by a ruling by the Securities Appellate Tribunal which had asked the markets watchdog to re-open the case of the acquisition of a stake in ACC by Gujarat Ambuja Cements and verify whether management control was obtained by the acquirer and whether the takeover code had been violated.